Why retailer TFG is particularly confident about Australia
Retailer TFG is outperforming its peers despite tough global trading conditions, with newly appointed CEO Anthony Thunström saying on Monday the group is particularly optimistic about Australia.
Group turnover for the first 20 weeks of the 2019 financial year increased 32% compared with the corresponding prior period, with strong turnover growth for TFG London and TFG Africa despite subdued retail activity in SA and the UK.
TFG’s performance in Australia is in contrast to Woolworths, which reported an after-tax loss of R3.5bn in the year to end-June, after a R6.9bn impairment of its department store chain David Jones.
The numbers look good, and speciality retailer TFG continues to grow ahead of its peers, said Avior Capital Markets retail analyst Atiyyah Vawda.
TFG in Australia is well positioned with underpenetrated brands and its focus on menswear, which is helping it avoid discounting, said Vawda.
"It’s a tough environment, so it is really quite encouraging," she said.
TFG, the owner of the Foschini, Totalsports and Markham brands, reported 7.6% growth in turnover at TFG Africa in the first 20 weeks of the year. This was despite the effects of the VAT increase and a shift of the Easter and school holidays into March. Turnover at TFG London grew 52% over the same period, and that of TFG Australia 15%.
"The multibrand strategy continues to deliver outperformance against the broader UK retail market, with international showing particularly strong growth in turnover and margin contribution," said Thunström.
The group’s performance will now be largely dependent on the forthcoming Black Friday and Christmas trade, with Thunström noting on Monday that 2018 had created a high performance base. TFG is also pressing ahead with the opening of six new outlets in the UK.